Established Covered Call Positions in Mondelez International and U.S. Bancorp

Today Covered Calls were established in Mondelez International (ticker symbol MDLZ) and U.S. Bancorp (ticker USB) when the Covered Calls Advisor's buy/write limit orders were executed.  For Mondelez, 300 shares were purchased at $66.04 and 3 July 5th, 2024 Call options were sold at $1.47 at the $65.00 strike price.   For U.S. Bancorp, 400 shares were purchased at $39.11 and 4 July 12th, 2024 Call options were sold at $1.55 at the $38.00 strike price.   

Given the Covered Calls Advisor's current "Neutral" Overall Market Meter outlook, moderately in-the-money Covered Calls positions were established.  The probability that the stock will be in-the-money on the options expiration dates was 71.5% for the Mondelez position and 71.6% for the U.S. Bancorp position.  Both positions have an intervening ex-dividend date, so the potential results detailed below includes the possibility of early exercise since the ex-dividends are prior to their respective options expiration dates.

1.  Mondelez International Inc. (MDLZ) -- New Covered Calls Position

The buy/write transaction was:
6/18/2024 Bought 300 Mondelez shares @ $66.04
6/18/2024 Sold 3 MDLZ 7/5/2024 $65.00 Call options @ $1.47 per share.  The Implied Volatility of these Calls was 13.2 when this position was established.

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $19,373.01
= ($66.04 - $1.47) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$438.99
= ($1.47 * 300 shares) - $2.01 commission
(b) Dividend Income (If Mondelez shares assigned on the business day prior to the June 28th ex-dividend date): = +$0.00; or
(b) Dividend Income (If MDLZ shares assigned at the 7/5/2024 options expiration date): +$127.50
= $.425 per share x 300 shares
(c) Capital Appreciation (If Mondelez shares assigned early): -$312.00
= ($65.00 strike price -$66.04 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If MDLZ shares assigned with stock above the $65.00 strike price at the July 5th options expiration): -$312.00
= ($65.00 -$66.04) * 300 shares

1. Potential Net Profit (If Mondelez shares assigned on 6/27/2024, the day prior to the June 28th ex-dividend date): +$126.99
= (+$438.99 options income +$0.00 dividend income - $312.00 capital appreciation)
2. Potential Net Profit (If Mondelez price is above $65.00 strike price at the July 5th options expiration): +$254.49
= (+$438.99 options income +$127.50 dividend income - $312.00 capital appreciation)

1. Absolute Return-on-Investment (If Mondelez shares assigned early on June 27th, 2024, the day prior to the ex-dividend date): +0.7%
= +$126.99/$19,373.01
Equivalent Annualized Return-on-Investment (If assigned early on day prior to ex-div date): +23.9%
= (+$126.99/$19,373.01) * (365/10 days)

2. Absolute Return-on-Investment (If MDLZ price is above the $65.00 strike price at the July 5th options expiration date): +1.3%
= +$254.49/$19,373.01
Equivalent Annualized Return-on-Investment (If assigned on the 7/5/2024 options expiration date): +28.2%
= (+$254.49/$19,373.01) * (365/17 days)

2.  U.S. Bancorp (USB) -- New Covered Calls Position
The buy/write transaction was:
6/18/2024 Bought 400 U.S. Bancorp shares @ $39.11.
6/18/2024 Sold 4 USB 7/12/2024 $38.00 Call options @ $1.55 per share.
Note: Implied Volatility (IV) of the Call options was at 21.1 when this position was transacted which, as I prefer, is above the current VIX of 12.4.   
6/27/2024 Upcoming quarterly ex-dividend of $.49 per share. 

Two possible overall performance results (including commissions) for this U.S. Bancorp Covered Calls position are as follows:
Covered Calls Net Investment: $15,026.68
= ($39.11 - $1.55) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$617.32
= ($1.55 * 400 shares) - $2.68 commission
(b) Dividend Income (If U.S. Bancorp Call options exercised early on June 26th, 2024, the last business day prior to the June 27th ex-div date): +$0.00; or
(b) Dividend Income (If U.S. Bancorp stock assigned at the July 12th, 2024 options expiration): +$196.00
= ($.49 dividends per share x 400 shares)

(c) Capital Appreciation (If U.S. Bancorp's Call options assigned early on June 26th): -$444.00

+($38.00 strike price - $39.11 stock purchase price) * 400 shares; or
(c) Capital Appreciation (If shares assigned at $38.00 strike price at the 7/12/2024 options expiration): -$444.00
+($38.00 - $39.11) * 400 shares

1. Total Net Profit [If option exercised early (business day prior to the June 27th ex-dividend date)]: +$173.32

= (+$617.32 options income +$0.00 dividend income -$444.00 capital appreciation); or

2. Total Net Profit (If 400 U.S. Bancorp shares assigned at the $38.00 strike price at the July 12th, 2024 expiration): +$369.32

= (+$617.32 options income +$196.00 dividend income -$444.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 6/27/2024 ex-dividend date]: +1.2%

= +$173.32/$15,026.68

Potential Annualized Return-on-Investment (If option exercised early): +46.8%

= (+$173.32/$15,026.68) * (365/9 days); or

2. Potential Absolute Return-on-Investment (If U.S. Bancorp's shares assigned on the July 12th options expiration date): +2.5%

= +$369.32/$15,026.68

Potential Annualized Return-on-Investment (If 400 U.S. Bancorp shares assigned at $38.00 at the July 12th, 2024 expiration): +37.4%

= (+$369.32/$15,026.68) * (365/24 days)